The Bank of England on Thursday said that major British banks need to restructure their resources and raise upto GBP 27.1 billion in fresh capital by the end of the year to cover possible losses and other financial risks.
Citing findings of a survey carried out by financial watchdog Prudential Regulation Authority, the BoE said five of the eight major UK banks, namely Barclays, Co-operative Bank, LBG, Nationwide and RBS, had an aggregate capital deficit of GBP 27.1 billion at the end of 2012, which well exceeded the standard.
In March, banks' had set plans to generate GBP 12.5 billion of the total shortfall, which has been revised up to GBP13.7 billion following the latest assessment.
According to the central bank, most of the intended actions to raise capital would require regulatory approval before being implemented, and those actions cannot be assumed to have contributed to meeting the requirement until approval is given.
Even after implementing the planned actions, banks are expected to have a shortfall against the 7 percent standard. To meet that deficit additional actions, including disposals and restructurings, will have to be planned, which would generate the equivalent of an additional GBP 13.4bn of capital.
With a capital shortfall of GBP 13.6 billion, the Royal Bank of Scotland is the main concern, followed by the Lloyds Banking Group which has GBP 8.6 billion shortfall.
Barclays and Co-operative bank are required to raise GBP 3 billion and GBP 1.5 billion respectively in additional capital, the study showed.
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